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General Studies 2021 GS Paper II 10 marks 150 words Compulsory Explain

GS Paper II — Q3

How have the recommendations of the 14th Finance Commission of India enabled the States to improve their fiscal position? (Answer…

How have the recommendations of the 14th Finance Commission of India enabled the States to improve their fiscal position? (Answer in 150 words) 10 marks

हिंदी में प्रश्न पढ़ें

भारत के 14वें वित्त आयोग की संस्तुतियों ने राज्यों को अपनी राजकोषीय स्थिति सुधारने में कैसे सक्षम किया है? (उत्तर 150 शब्दों में दीजिए)

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Model answer

Written by UPSC Answer Check against this question's marking rubric, to the 150-word length. UPSC does not publish answers for Mains — this is one way to score well, not an official key.

The 14th Finance Commission (FFC) fundamentally strengthened state finances by engineering a structural shift toward untied, formulaic fiscal transfers.

Augmenting Fiscal Autonomy: By increasing the states' share in the divisible tax pool from 32% to 42%, the FFC directly infused unconditional revenue into state exchequers. This expanded fiscal space was reinforced by the abolition of the Plan/Non-Plan distinction and the rationalisation of Centrally Sponsored Schemes (CSS), which curtailed rigid central conditionalities and allowed states the programmatic flexibility to align expenditures with local priorities.

Targeted Support and Decentralisation: The Commission addressed regional fiscal disparities by providing Post-Devolution Revenue Deficit Grants under Article 275 to fiscally stressed states like Assam, Himachal Pradesh, and Jammu & Kashmir. Concurrently, it devolved significantly higher statutory grants directly to Panchayati Raj Institutions (PRIs) and Urban Local Bodies (ULBs), relieving state budgets of basic civic delivery burdens.

What "Explain" is asking you to do

Make the working of something clear — what sets it off, what follows from what, and what it produces. Explain is the Commission's mechanism word: it dominates the technical papers and the “explain why” stems, where the marks sit in the causal chain and not in the label.

Structure that answers it

State what it is → the initiating condition → the chain of cause, step by step → an instance where it plays out → what the chain produces

Where marks are lost

Describing what something looks like instead of why it works that way. Naming the stages without linking them reads as description too.

All UPSC directive words, compared →

How this answer will be evaluated

Approach

Framework: GS2: Governance, Development, and Social Justice. explain: definition/context > points in order > small example > short close Full marks: Precisely identifies the 42% share and the three specific grants with their purpose.

Key points expected

  • Mention the increase in states' share of divisible taxes to 42%.
  • Explain the shift from conditional grants to unconditional grants.
  • Identify the three specific grants: Fiscal, Revenue, and Devolution.
  • Link the grants to the 73rd/74th Amendments (Panchayati Raj/Municipalities).

Evaluation rubric

Each sub-part is marked on its own, against the marks and word limit printed on the paper.

  1. The answer Explain the specific mechanisms of the 14th Finance Commission that improved state fiscal health. 10 marks · 150 words

    explain— definition/context → points in order → small example → short close

    Must cover

    • Mention the increase in states' share of divisible taxes to 42%.
    • Explain the shift from conditional grants to unconditional grants.
    • Identify the three specific grants: Fiscal, Revenue, and Devolution.
    • Link the grants to the 73rd/74th Amendments (Panchayati Raj/Municipalities).

    Loses marks

    • Reciting general fiscal policy without specific 14th FC details.
    • Confusing 13th and 14th Finance Commission recommendations.
    • Failing to mention the specific grant types.

    Earns more

    • Mention the reduction in vertical fiscal imbalance.
    • Note the focus on 'equalization' of states.
    • Reference the specific formula for the Fiscal Grant.
    • Mention the 'Devolution Grant' for local bodies.

    Extra mark

    • Cite the specific percentage increase (32% to 42%).
    • Mention the 'Revenue Deficiency Grant' specifically.

Practice this exact question

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